Wednesday, May 7, 2014

Economics Settles Ukraine

Putin doesn't want Ukraine that bad

My guy in
the Kremlin, Vladimir, senses a tar baby in the briar patch, I think. He’s not enthusiastic about formally moving
his troops into Ukraine. He knows it
could be like George W. Bush’s experience with Iraq – a quick victory followed
by years of trying to extract oneself from a guerrilla quagmire. Sanctions would not be Putin’s biggest problem. The cheering following the easy pluck of
Crimea would turn to disillusioned grumbling by the same Russian
nationalists. Putin has raised
expectations and he may have to act against his own best judgment but he prefers
a diplomatic out – one that gives greater autonomy to eastern Ukraine. This is where the negotiations at Munich,
1938, become instructive. Britain and
France pressured Czechoslovakia into acceding to Hitler’s demand despite the
fact that the Czechs were not a military pushover. Turning over its border regions to Germany
emasculated the Czech defense, enabling the Germans to easily swallow the rest
of the nation soon after the treaty was signed.

This is not
the course of action for the Ukraine but Putin certainly hopes the West will
pressure Kiev in granting semi-autonomy to its eastern regions. The motivation for coming to an agreement is
economic, for the West and not just Russia.
Powerful business interests in Western Europe and the U.S. want to see
this confrontation resolved. They have
billions invested in Russian development and they’d like to invest more. Sanctions
cut both ways and no one wants to put the western economies back into
recession. It’s good for business to
defuse the situation and get commerce back to flowing on a normal basis. If the Ukraine can’t soon find a way to
extend their control to their eastern borders they will have to face up to
realities and make broad accommodations to their portion of the population that
view themselves Russian.